Carborundum Universal Limited — Q2 FY26

Carborundum Universal Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=cFoymuqdl5o Published: 6 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to Northern R Capital Q2 FI26 earnings call. As a reminder, all 0:10 10 seconds participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:19 19 seconds you need assistance during the conference call, please signal an operator by pressing star then zero on 0:26 26 seconds your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Park Jariala from Dan Capital. Over to you sir. 0:38 38 seconds Thank you. Good evening everyone. 0:41 41 seconds Welcome to Q2 FI26 earnings call of Northern Capital Limited. I thank the management for giving us the opportunity 0:49 49 seconds to host a call. From the management team we have Mr. Ashish Notra, managing director and CEO. Mr. Atul Tedraan, 0:59 59 seconds Chief Financial Officer, Mr. Patasardi Ralabandhi, group risk officer and governance head. Mr. Chetan Parmar, head 1:08 1 minute, 8 seconds in investor relations. Without further ado, I'll hand over the floor to Mr. 1:13 1 minute, 13 seconds Ashishotra MD for his opening remarks post which we can open the floor for Q&A. Over to you, sir. Thank you. 1:22 1 minute, 22 seconds Hey, thank you Pat. Uh, thank you very much. Good evening everyone. I'm delighted to welcome you in today's 1:29 1 minute, 29 seconds call. Thank you for joining us for today's conference to discuss Northern Capital performance for the quarter ending September uh 30th 2025. 1:39 1 minute, 39 seconds I'm also joined by my colleague like Bart said Atul Brial our CFO uh Parasa Sarti Ralabandhi our group CRO and 1:47 1 minute, 47 seconds governance head Jigar Seta head of strategy Chetan Parma head of investor relationship uh let me begin with macroeconomic 1:55 1 minute, 55 seconds environment I think India continues to demonstrate remarkable resilience despite global uncertaintities including 2:03 2 minutes, 3 seconds tariff related pressures geopolitical tension in the last 15 months Indian economy had faced multiple headwinds 2:10 2 minutes, 10 seconds including slowdown in urban consumption, private credit investments, decline in manufacturing activity, rising protectionism and supply chain 2:19 2 minutes, 19 seconds disruptions. However, fair to say in the recent policy measures, notably in income tax, GST, RBI, liquidity and 2:28 2 minutes, 28 seconds regulatory easing initiatives are expected to stimulate the consumption and support a broader economic revival. 2:35 2 minutes, 35 seconds A normal monsoon will further add to the rural demand and stability. Together, these factors are poised to strengthen the country's growth momentum in the coming quarters. 2:46 2 minutes, 46 seconds Following the repo rate cut earlier this year and the recent government stimulus through GST rate reduction expected to 2:54 2 minutes, 54 seconds provide a flip to consumption, creating supporting environment for higher growth in the second half of FY26. 3:02 3 minutes, 2 seconds We began witnessing early signs of revival in credit growth towards the later part of quarter 2 and this 3:09 3 minutes, 9 seconds permanent positive momentum has further strengthened through the October reflecting in improving credit demand environment across the key segments where we operate. 3:19 3 minutes, 19 seconds Our assets in the management grew by about 15% on a year-on-year basis and about 6% on quarteronquarter basis to 3:26 3 minutes, 26 seconds 14,166 crores. Uh reflecting the early signs of momentum which is in line with other players in the market. However, 3:35 3 minutes, 35 seconds excluding the rural finance book which we consciously calibrated the growth would have been 22% uh which would have 3:43 3 minutes, 43 seconds been better than the industry growth rate. growth was predominantly driven by a direct to customer segment which 3:49 3 minutes, 49 seconds accounted for 54% of our total assets under management as of September 25. 3:55 3 minutes, 55 seconds uh direct to customer AUM grew by about 17% from 6,498 crores uh in September 22 to about 7,628 4:05 4 minutes, 5 seconds crores in September 25 excluding the micro finance or rural finance business a direct to customer 4:13 4 minutes, 13 seconds business assets and the management has grown by about 32% on a yearon-year basis which is in line with the guided 4:20 4 minutes, 20 seconds strategy to grow the direct retail book by over 30%. % growth in D2C segment is driven by 4:27 4 minutes, 27 seconds strong momentum in the MSME space which grew by about 42% on a nearon-year basis. Uh to support this momentum we've 4:36 4 minutes, 36 seconds added another 100 employees across sales collection functions uh during the quarter and expanded our network with 50 new branches in FY26. 4:47 4 minutes, 47 seconds These investments further strengthen our strengthen our infrastructure position us for sustainable growth in the coming 4:54 4 minutes, 54 seconds quarters. MSME is a very vast opportunity which we are trying to make conscious efforts to grow. We are also 5:02 5 minutes, 2 seconds building this brick by brick as it gives us a long tailor nut income of secured asset pools. Our consumer finance 5:10 5 minutes, 10 seconds business continue to demonstrate healthy momentum. Our assets and the management has grown by 24% on a nearon-year basis. 5:19 5 minutes, 19 seconds We are witnessing early signs of pickup in consumption demand driven by credit demand supported by 5:27 5 minutes, 27 seconds recent GST rate curves and ongoing festival seasons. This positive trends has extended into October this year. We 5:35 5 minutes, 35 seconds expect the credit demand in the second half of the year to be much better than that what we witnessed in the first half for this segment. 5:44 5 minutes, 44 seconds Coming to rural business, we have consciously calibrated a micro finance portfolio while largely retaining a 5:50 5 minutes, 50 seconds strong operational base of 285 branches over,900 employees. Our incremental power zero plus accretion has now 6:00 6 minutes reverted to the pre-stressed level reflecting a steady improvement in the portfolio quality. 6:06 6 minutes, 6 seconds notable fair to bring out that 80% of MFI book comprises loans originated after implementation of the Mfin card 6:14 6 minutes, 14 seconds rails and nearly 40% of our portfolios covered under CGFMU and incrementally we continue to cover portfolio as we originate new loans under this program. 6:26 6 minutes, 26 seconds This sustained improvement in asset quality supported by a robust infrastructure gives us confidence and capabilities to scale up our MFI business as we go forward. 6:37 6 minutes, 37 seconds Our intermediate retail part of the crate solution business has recorded a healthy growth of 13% on a year-on-year basis. Building on the recent GST cuts 6:47 6 minutes, 47 seconds and festival seasonled demand, we remain optimist that the great growth in the second half of the year would be stronger than in the first half. 6:54 6 minutes, 54 seconds Consistent with the guidance shared in our earlier calls, a feebased business, a key differentiator for Northern 7:02 7 minutes, 2 seconds continued to complement our lending operation. Our performing credit funds has grown by 14% on a yearon-year basis 7:09 7 minutes, 9 seconds to 13,196 crores. In addition, a new funds u a few new funds in pipeline we expect to 7:16 7 minutes, 16 seconds launch in the coming quarters which will further enhance our assets under the management and then strengthen our PE income. This underscores our strategic 7:24 7 minutes, 24 seconds focus on building a comprehensive credit solution ecosystem rather than solely relying on the balance sheetled model. 7:32 7 minutes, 32 seconds Turning to asset quality, our credit performance remains best-in-class supported by a prudent risk management and conservative provisioning 7:40 7 minutes, 40 seconds philosophy. We continue to maintain a very high quality portfolio by proactively providing for stressed and unsecured exposures. 7:49 7 minutes, 49 seconds The credit cost for the quarter improved to 2.7% compared to 3% in quarter 1 of this fiscal year resulting in H1 credit 7:59 7 minutes, 59 seconds cost of 2.8% which remains within well within our guidance of around 3%. 8:05 8 minutes, 5 seconds Improvement was primarily driven by revival in consumption trends and improving economic environment leading to stronger collection in the consumer finance segment. 8:15 8 minutes, 15 seconds We also witnessed a decline in MFI provision supported by our portfolio calibration and the fact that 80% of our 8:22 8 minutes, 22 seconds book knob in line with the new MIN guard rails and 40% of that is covered under the CGFMU. 8:30 8 minutes, 30 seconds Additionally, our analyticsdriven collection and recovery initiative further strengthen recoveries and help contain slippages. 8:37 8 minutes, 37 seconds We believe that the steps taken including responsible and sustainable lending practices, focus on long tenure 8:45 8 minutes, 45 seconds retail products, adoption of unfin guard rails and the coverage of all rural finance assets under CGFMU guarantee 8:54 8 minutes, 54 seconds scheme will help stabilize delinquencies going forward. In addition, we have further strengthened our collection 9:02 9 minutes, 2 seconds infrastructure which is expected to drive continued improvement in recoveries across our retail portfolio in the coming quarters. 9:12 9 minutes, 12 seconds Having said that uh H125 credit cost stands at about 2.8%, as we move into the second half of the year, 9:20 9 minutes, 20 seconds we believe we should be hold on to this momentum and numbers by end of the year and have a credit cost in a range of 2.6 to 2.8%. 8% 9:29 9 minutes, 29 seconds that we are guided during the uh quarter 1 results. On the funding side, we seeing the great work by a treasury team 9:38 9 minutes, 38 seconds able to negotiate to ensure that the passing down of the rate benefits reflecting in our borrowing cost 9:47 9 minutes, 47 seconds and that started reflecting starting from Feb to June borrowing we've done which is lower than the MCAR rate and I'm sure my colleague Atul will share 9:56 9 minutes, 56 seconds more details about it later in this call. Overall these positive development gives us a confidence that we we are 10:03 10 minutes, 3 seconds well positioned to achieve our guided among growth of 22 to 25 22% and ROA around 2.8% plus for the year FY26. 10:14 10 minutes, 14 seconds With that I will now hand over the call to Atul to walk you through our quarter 2 numbers in detail. And thanks Aul over to you. 10:23 10 minutes, 23 seconds Uh thank you Ashish and good evening everyone. I apprec I appreciate all for joining the northern Q2 earnings call. 10:30 10 minutes, 30 seconds Let me walk you through the financial performance. Our assets under management stood at 14,166 crores reflecting a 10:38 10 minutes, 38 seconds growth of 15% yearonear and 6% quarteron quarter. Within the AU mix, the direct to customer business contributed 54%. 10:48 10 minutes, 48 seconds Of which MSME finance was at 22%, consumer was at 26% and MFI consciously 10:55 10 minutes, 55 seconds calibrated at 6%. Net interest income for quarter 2 stood at 322 crores which 11:02 11 minutes, 2 seconds is up 12% YI. The yield on advances have improved by 10 basis points quarteron on quarter to 16.3%. 11:10 11 minutes, 10 seconds and the cost of fund improved by 40 basis points quarteron quarter resulting in NIM expansion of 40 bips quarteron quarter to 9.3%. 11:20 11 minutes, 20 seconds As Ashish highlighted banks have started to pass on the benefit of the repo rate cards through reductions in the MCLR 11:27 11 minutes, 27 seconds during Q2 FY26 banks MCLR declined by close to 25 bips. of the cumulative 100 11:34 11 minutes, 34 seconds bips reduction in the repo rate so far about 40 bibs has been transmitted to the borrowers. This combination of lower 11:41 11 minutes, 41 seconds MCLR uh rate uh and the repricing of our existing borrowing resulted in a 40 bit sequential decline in our cost of funds 11:50 11 minutes, 50 seconds to 8.5% in quarter 2 FY26 compared to 8.9% in quarter 1 FY26. 11:57 11 minutes, 57 seconds The net revenue including the fee income rose 10% y to 344 kores. Fee fee and 12:03 12 minutes, 3 seconds other income was at 21 kores. Our opex ratio for Q2 stood at 3.7%. 12:11 12 minutes, 11 seconds Uh the slight uptake in the OPEX was primarily on account of strengthening our MSME team particularly in sales and collections. Uh the pre-provisioning 12:20 12 minutes, 20 seconds operating profit or POP as we call it for the quarter was 213 kores. Asset quality remained quite stable with GMPP at 1.15% and NNPA at.56%. 12:32 12 minutes, 32 seconds Provision improved sequentially to 92 KES in Q2 compared to 102 KSE in Q1 and this reduction was primarily driven by 12:40 12 minutes, 40 seconds lower provisioning in the MFI portfolio and a revival uh in the consumption trends that uh supported stronger 12:47 12 minutes, 47 seconds recoveries. On a percentage basis, the overall credit cost for Q2 improved to 2.7% compared to 3% in Q1. And as Ashish 12:57 12 minutes, 57 seconds highlighted, we expect credit cost to remain stable in the range of 2.7 to 2.9% in the second half of the year. 13:05 13 minutes, 5 seconds The profit after tax for Q2 increased by 13% uh quarteron quarter to 92 crores compared to 81 kores uh in quarter 1. 13:14 13 minutes, 14 seconds ROA also improved by 22 basis points uh quarter on quarter to reach 2.6%. 13:21 13 minutes, 21 seconds ROE for the quarter improved by 78 basis points quarter on quarter to reach 10.1%. 13:27 13 minutes, 27 seconds On the liabilities front in line with our debt strategy and AUM growth plans. 13:32 13 minutes, 32 seconds Uh we continue to diversify our funding base with a clear focus on long-term funds including borrowing through the NCD and the ECB route. Liquidity remains 13:40 13 minutes, 40 seconds very comfortable with positive cumulative mismatch across all the time buckets. As of September 25, we held surplus liquidity of close to 600 crores 13:50 13 minutes, 50 seconds and undrawn sanctions of over 1150 kores from various banks and institutions. 13:56 13 minutes, 56 seconds Total borrowing at the end of the quarter stood at 10,331 Kors with approximately 70% linked to variable 14:03 14 minutes, 3 seconds interest rate positioning us well to benefit from the ongoing decline in the interest rate. Our funding mix remains very diver well diversified with 25% 14:12 14 minutes, 12 seconds sourced from offshore and DFI partners and the balance 75% from domestic banks, institutions and capital markets. 14:20 14 minutes, 20 seconds Tangible net worth stood at 13 3,663 kores and which is up 10% yi. We have 14:29 14 minutes, 29 seconds strengthened the balance sheet materially. Our debt equity ratio also improved from 3.9 in March 24 to 2.8 14:35 14 minutes, 35 seconds eight times as of September 25. Capital adequacy remains quite strong at 24.6% 14:42 14 minutes, 42 seconds well above the regulatory requirements giving us ample headroom to grow the balance sheet over the next 3 years. Uh thank you so much. 14:58 14 minutes, 58 seconds So are we good to begin? Yeah. Are we good to begin the Q&A session? Right. to go to the Q&A. 15:06 15 minutes, 6 seconds Okay. So, thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a 15:12 15 minutes, 12 seconds question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you 15:20 15 minutes, 20 seconds may press star and two. Participants are requested to use handsets while asking a question. 15:28 15 minutes, 28 seconds Ladies and gentlemen, we'll wait for a moment while the question queue assembles. 15:38 15 minutes, 38 seconds The first question is from the line of Dantara from Green Edge Belt. Please go ahead. 15:46 15 minutes, 46 seconds Yeah. Uh I thank you for the opportunity. Uh uh you know it is good to see that you know our credit costs 15:53 15 minutes, 53 seconds have stabilized now at 2.7. uh but a just one question to you here that uh you know in the next two quarters which 16:00 16 minutes is H2 uh you know because your fullear guidance is 2.6 to 2.8 so it means that you know we may not see any reduction in 16:08 16 minutes, 8 seconds uh credit cost and then generally we were thinking that because MFI and small lap you know the worst is probably 16:18 16 minutes, 18 seconds for the no we like we said anywhere between 2.6 6 to 2.77 and a half. I think we will hopefully should see an improvement. 16:28 16 minutes, 28 seconds Like I said that the quality of the new book is both in case of rural finance or MFI is actually better than what we were 16:36 16 minutes, 36 seconds seeing in the April uh 24. So which is pre-stressed level. It is actually performing better than that. We seeing 16:44 16 minutes, 44 seconds sequential improvement across the portfolio. But if there is a residual stuff which needs to pass through that that will pass through and uh that's one 16:53 16 minutes, 53 seconds of the reasons why we are holding on to it uh obviously with the investments in collection and in investments in 17:00 17 minutes analytics will allow us to get some more incremental gains. That's the position we taking. It's always good to be 17:07 17 minutes, 7 seconds prudent and uh make promises which we will give you positive surprises. 17:13 17 minutes, 13 seconds Right. Okay. That that's great. I I always thought so that uh you know no I'm I'm holding on to what I said and you know everything we've said in our 17:21 17 minutes, 21 seconds comment we've also referred to the earlier guidance and it's important for us to build that level of uh in what we are saying and how we demonstrate the 17:30 17 minutes, 30 seconds performance against the comment we make in this perfect perfect my second question is on the partnership business maybe the last 17:38 17 minutes, 38 seconds 12 months the growth was slow because you know the underlying NBFC ecosystem in high lending itself was going through this entire micro stress uh next 12 17:47 17 minutes, 47 seconds months do you expect better growth rates in the placement business and the you know the partnership loan book which is say around 65 6700 crores is that 17:56 17 minutes, 56 seconds possible I think you know we we look at uh credit solution as a single cohort and if you refer to our slide I think we are very 18:04 18 minutes, 4 seconds unique franchise with ability to underwrite large pool of retail loan across seven sectors of retail credit uh 18:14 18 minutes, 14 seconds process that through our own bespoke tech platform, underwrite it through a time-t tested model, give it to institutional investors, give it to 18:21 18 minutes, 21 seconds retail investor through our bonds platform called Altify.ai, uh, invest in our fund performing credit funds and support from balance sheet. 18:30 18 minutes, 30 seconds And I think that's the sequence we we we want to follow. So the focus is more towards building a holistic credit solution business rather than a simplified balance sheetled approach. 18:43 18 minutes, 43 seconds Right. Right. Right. Okay. Okay. And and just the credit cost for this division, you know, the the partnership division was slightly higher this quarter versus 18:51 18 minutes, 51 seconds last quarter like any hold some prudent provision in it. Uh we've said that uh even earlier I think those are incremental overlays we've 18:59 18 minutes, 59 seconds taken and uh you know as in the coming quarters as we run through the situation uh as we we continue we seeing the 19:07 19 minutes, 7 seconds improvement the partners should also see the same improvement which we seeing in the flow rate. we will start releasing what needs to be released. 19:14 19 minutes, 14 seconds Great. Great. Great. And then now my last question is on the opex that this quarter was slightly higher. Was it because of the collections infra we are building in the small lap? 19:22 19 minutes, 22 seconds The idea was was to proactively also build back on the both while we continue to hold the infra on the rural finance 19:30 19 minutes, 30 seconds side but we also wanted to build a lot more on the direct lending capabilities and I thought it's a good thing for us to initiate it. We spoke about it but 19:39 19 minutes, 39 seconds our guidance on that remains uh rangebound uh aeropics will remain between uh 3.6 to 3.7 1/2% to 3.8% 19:49 19 minutes, 49 seconds around that range. Uh we we are over that 4% mark long time back. We made the right set of investments and if you 19:56 19 minutes, 56 seconds continue to make investment we'll remain well within the range point. You will see a movement between a quarter and that's depending on how do you 20:03 20 minutes, 3 seconds prioritize what what expenses you undertake but on a full year basis we should land between 3.7 to 3.8 Perfect, 20:12 20 minutes, 12 seconds perfect, perfect, perfect, thank you so much. Uh, wish you all the best and hopefully we wish to see a 100 cr plus quarter soon. Thank you so much. 20:21 20 minutes, 21 seconds Yeah, thank you. 20:24 20 minutes, 24 seconds Thank you. The next question is from the line of Shwa from Vara. Please go ahead. 20:31 20 minutes, 31 seconds Thank you sir for the opportunity. Uh sir could you throw some light on MSME credit and um uh have we have we have to 20:40 20 minutes, 40 seconds yet to assume that the challenges haven't subsided fully because your transaction volume sequentially have been quite sluggish the placement 20:48 20 minutes, 48 seconds volumes also have been softer. Um are we still sensing some challenges or pressures or it's more to do with um uh being being slightly cautious? 21:01 21 minutes, 1 second Hey Sha, thanks. Uh I think uh like we said earlier we continue to follow a calibrated and a little bit cautious 21:07 21 minutes, 7 seconds approach. We do not represent in a placement business institution where we don't track risk. We are not like other 21:15 21 minutes, 15 seconds arrangers. It is skin in the game for northern art. So we consciously take the first a pool which we take for an 21:23 21 minutes, 23 seconds institutional investor needs to pass through our pool filters and that's why you know 90% of investors continue to 21:30 21 minutes, 30 seconds buy pools from us for over 3 to 5 years they are they are the last clients so I think that's where it is there also the 21:38 21 minutes, 38 seconds demand on this sector has been slightly slow uh that is one of the reasons but on our own balance sheet you've seen 21:45 21 minutes, 45 seconds that business has grown tremendously and we continue to see that growth momentum. 21:50 21 minutes, 50 seconds I think as we get into uh H2 uh of this year, we seeing massive traction being 21:57 21 minutes, 57 seconds building in the in the in our placement business and in our in our bonds platform. Those two will auger really well for us to build the fee franchise apart from the growth in the funds. 22:09 22 minutes, 9 seconds Sure. And so secondly, uh what contributed to higher credit cost on the intermediate retail segment? 22:17 22 minutes, 17 seconds Like I said earlier, it's a prudent provisioning which we're carrying on some of the accounts. Uh there is there 22:25 22 minutes, 25 seconds is no specific reason uh for us to do it but we wanted to have enough management overlay. Um given the stress which we 22:32 22 minutes, 32 seconds witnessed or what we seeing the amount of credit which flows through it's good to have food and provision. 22:40 22 minutes, 40 seconds Okay. Okay. So, so just to follow up there, so u so even the stage two that sort of saw some spike uh sequentially 22:48 22 minutes, 48 seconds uh emerged from uh so which portfolio contributed to this spike on stage two? 22:56 22 minutes, 56 seconds Uh I think uh that came in on the unsecured business loan side where we where we created uh some bit of provisioning and that's one of the 23:04 23 minutes, 4 seconds reasons why you're seeing slight increase in the stage two. Sure. Thank you so much. 23:12 23 minutes, 12 seconds Thank you. 23:14 23 minutes, 14 seconds Thank you. The next question is from the line of Shubranch Mishra from Philip Capital. Please go ahead. 23:22 23 minutes, 22 seconds Um, hi Ashish, good evening. Thanks for this opportunity. Uh, just wanted to understand uh which all sectors uh do we 23:30 23 minutes, 30 seconds cater to in the MSM uh financing and uh which all sectors are actually uh under 23:37 23 minutes, 37 seconds stress? Are they tariff elevator se uh uh sectors or are there uh some other kind of uh sectors? Uh I believe we have 23:47 23 minutes, 47 seconds a huge concentration in Tamil Nadu which again has uh some hot spots for MSME like similar to so on and so forth. So 23:56 23 minutes, 56 seconds if you can uh speak about specifics within the MSME okay the way to look at our MSME business is a pretty broad spectrum. 24:06 24 minutes, 6 seconds Primarily big focus is to do lending uh with the average ticket size of 10 to 85 lakhs uh which is secured by hard 24:15 24 minutes, 15 seconds collateral with full mod registration and customer 24:24 24 minutes, 24 seconds is the financial or the projected income or theed income or the drive income. So that means that's a that's a very good 24:31 24 minutes, 31 seconds quality business for us. We uh financing and we not seeing not 24:40 24 minutes, 40 seconds seeing any stress and there is a small there's a smaller component of an unsecured business loan which is secured 24:47 24 minutes, 47 seconds through uh by leveraging the RBI's uh five loss uh coverage 24:56 24 minutes, 56 seconds in our piece uh that's the one way we cut it u our this philosophies is pretty 25:05 25 minutes, 5 seconds comprehensive and we look at the risk both at a product level geography level going down to state level the point made 25:13 25 minutes, 13 seconds both at a portfolio whether it's to do with the rural finance portfolio and MSME portfolio nowhere we'll have more than 26% of our exposure in any 25:23 25 minutes, 23 seconds district across product can have more than 5% so we have this hard defined 25:29 25 minutes, 29 seconds trails which we follow that to my mind is the true power of a diver specified uh uh lending business to ensure that 25:37 25 minutes, 37 seconds you're able to navigate across sites uh and as an as an expense. 25:45 25 minutes, 45 seconds Uh understood. And my second question is on the MFI we do CG FW insurance. So when does what is the mass of the 25:53 25 minutes, 53 seconds insurance when does it kick in? And uh my sense is that unless one has less than uh 2% kind of GNPS doing an 26:02 26 minutes, 2 seconds insurance with uh CDF doesn't really make sense. So in that case business built for more than 2% GNPS. 26:12 26 minutes, 12 seconds No no I think let's let's let's I want to make one thing very categorically 26:18 26 minutes, 18 seconds very clear. Our entire rural finance business runs on a time-tested lending scorecards. 26:28 26 minutes, 28 seconds While we do follow JLG and a non nonJG financing model which is more from acquisition, servicing and the 26:35 26 minutes, 35 seconds engagement with the end customers but each loan approval is a function of new 26:41 26 minutes, 41 seconds score. uh and we've fair to say at some point in time we've we've underwritten 26:48 26 minutes, 48 seconds over 60 million loans uh there directly or indirectly. Uh so scorecards 26:56 26 minutes, 56 seconds determine whom we going to lend. We've tested this scorecard again and again and uh the all new sourcing effective 27:03 27 minutes, 3 seconds March this onward is under FMU scorecard is actually non-negotiable. So we've 27:12 27 minutes, 12 seconds tested it across the last 36 months. We looked at it. We've done the look back. 27:17 27 minutes, 17 seconds We've done the look forward analysis to ensure what quality of customer we want to do. We've also said that 80% of all 27:25 27 minutes, 25 seconds book including new and old follows the guard ring. Means the quality of new assets is significantly better. bar zero 27:35 27 minutes, 35 seconds on the newer vintages uh is is less than 40 basis 45 basis. So that tells you the quality of the books. I'm going to 27:43 27 minutes, 43 seconds request my colleague Parasa to add more texture. Yeah. 27:47 27 minutes, 47 seconds Uh regards to risk here. uh Ashish has covered specifically on micro finance 27:54 27 minutes, 54 seconds while the CGFMU cover is there to ensure that we don't have big volatility the way we have seen in the last few most of the market in most of the industry has 28:02 28 minutes, 2 seconds seen the last few quarters uh that is not the basis on which we take great exposures rate exposures are taken based 28:10 28 minutes, 10 seconds on the risk that we see at the borrower level and if it is acceptable to that extent uh the portfolio is covered by 28:17 28 minutes, 17 seconds EGFMU I mean all the portfolio that originated from March 25 is covered by CGFMU. But again, uh that's not how the 28:25 28 minutes, 25 seconds underwriting is done. It's not the on which underwriting is done. 28:31 28 minutes, 31 seconds Understood. Thank you so much. This was very helpful. Uh look forward to uh this. Hey, thank you. 28:40 28 minutes, 40 seconds Thank you. The next question is from the line of Chintan Sha from ICA Securities. Please go ahead. 28:49 28 minutes, 49 seconds Uh yeah uh thank you for the opportunity and uh congrats on a good set of numbers. Uh so firstly on the margins 28:57 28 minutes, 57 seconds front so margins have kind of uh seen a steep uptick. So almost 40 bits improvement largely driven by the 29:05 29 minutes, 5 seconds funding cost. Uh so how much of the funding cost is yet to be how much the borrowings are yet to be repriced? I 29:13 29 minutes, 13 seconds understand the 70% of the borrowings are floating in nature. So most of them have been repriced or do we anticipate some 29:20 29 minutes, 20 seconds further benefit in S2 as well? Uh yeah that's the first place. 29:24 29 minutes, 24 seconds So thank you. I'm going to request at over to you for all the great work Treasury is done. 29:29 29 minutes, 29 seconds Hey thanks. Hi Chintan. So on the liability Chintan as you mentioned you know our strategy uh is to diversify and 29:38 29 minutes, 38 seconds with a clear focus on long-term resources. U so this quarter the key livers for us was uh issuance through 29:45 29 minutes, 45 seconds the NCB and the ECB route uh so the cost of fund uh you know incrementally for us has been in the range of 8.7% 29:53 29 minutes, 53 seconds consistently which is best of the class in terms of our rating category you will not have too many NBFCs with such a cost 29:59 29 minutes, 59 seconds of fund uh in in the AA minus category uh nevertheless on the on your question of uh uh the the interest rate uh you 30:09 30 minutes, 9 seconds know we have roughly we have availed 50% of the benefit of uh the MCLR cuts but 30:16 30 minutes, 16 seconds uh you know repricing of around 50% of our balance uh liabilities is yet to happen that will gradually happen in December and March what quarter you know 30:25 30 minutes, 25 seconds most of the borrowings actually takes place in the later half of the year and most of them will come up for repricing after completion of a year or so uh you 30:34 30 minutes, 34 seconds know in December or or March quarter. So we have good amount of headroom for further reduction. Uh so so we are very 30:43 30 minutes, 43 seconds hopeful of a good set of uh you know numbers going forward as well. Uh 70% of the interest rate uh is variable for us. 30:53 30 minutes, 53 seconds You know borrowings is variable for us and this is very advantageous as far as uh you know the declining interest rate environment is concerned. So yeah so so 31:02 31 minutes, 2 seconds so this is a key contributor for us uh in in the form of uh increased uh you know name expansion during the quarter 31:11 31 minutes, 11 seconds uh sure so if you could also break that 70% into how much of that is linked to repo MCLR three month 6 months one year 31:19 31 minutes, 19 seconds as much as so I would say around 50% of that 70% would be linked to one year MCLR and uh 31:26 31 minutes, 26 seconds the balance would be you know 6 month 3 month or T bills as well as uh well as a repo rate. So but 50% would be one year 31:35 31 minutes, 35 seconds MCLR and most of the one-ear MCLR would have come up for repricing only in the later part of the year. But one good 31:42 31 minutes, 42 seconds thing is that incrementally we are seeing not only uh the we are getting the benefit of the lower MCLR but the spreads have also come down and the 31:51 31 minutes, 51 seconds other important feature for us was the issuance of NCDS. I think uh that is very key to us. uh you know we have 31:58 31 minutes, 58 seconds successfully raised a large NCD issuance in the previous quarter and we'll be doing more such issuance uh in the coming quarters as well. 32:08 32 minutes, 8 seconds Uh sure. Uh now on the OPEX front actually if I understand the OPEX looks elevated largely because of the PN 32:16 32 minutes, 16 seconds commission expansion if you look at the due point uh the OPEX is like around from 3.5 to 3.7 but still that is some 32:23 32 minutes, 23 seconds 2.4% increase on the employee cost. But this 3.7 should largely be the peak. So more uh we don't expect any rise from 32:31 32 minutes, 31 seconds there. This is largely in line with our guidance. Right. 32:33 32 minutes, 33 seconds No. Uh Shindan the fee and commission that you see is actually netted off from the interest uh income because this is the uh you know serer fee that is paid 32:43 32 minutes, 43 seconds for the uh partnership business and uh this is in the investor presentation that you see this is uh netted off in 32:49 32 minutes, 49 seconds the interest income or the yields. So uh the opex of 3.7% is largely the employee cost and the other opex and that has 32:57 32 minutes, 57 seconds slightly uh increased and as Ashish mentioned primary load account of the collection infrastructure that has been built uh over the last 3 to four months. 33:09 33 minutes, 9 seconds Sure. Sure. So this is likely is there any scope for reduction here or no or this will be 33:16 33 minutes, 16 seconds yeah the guidance we had also given that we'll be uh you know in the range of 3.7 to 3.8 8% uh uh you know during the year 33:24 33 minutes, 24 seconds and I think we will we are still sticking to that guidance. We don't see too much of a movement uh as far as uh uh the opex ratio is concerned. It 33:32 33 minutes, 32 seconds should be uh in this in this range going forward as well. 33:37 33 minutes, 37 seconds Uh sure and I think if you could just help us with the number of oneplus if at all we can share that number for the 33:45 33 minutes, 45 seconds portfolio. How much was that a quarter ago? 33:48 33 minutes, 48 seconds Can we share it offline if you run it by product will take off then we'll share it with you offline if that's okay with 33:56 33 minutes, 56 seconds you so no and on that HFC exposure so any update on the HFC exposure where are we in terms of the process legal process 34:04 34 minutes, 4 seconds or have we started to uh take the accounts payment in our book so any update we've been doing that from uh from the 34:13 34 minutes, 13 seconds very beginning itself and we did the direct assignment we hold the title documents ments all that is there but nash uh and nash obviously we've been 34:22 34 minutes, 22 seconds presenting nash uh and uh the title documents are in our custody we working through with them since this is under uh 34:31 34 minutes, 31 seconds subjudice it'll be unfair for me to disclose more okay okay so and just one lastly on the 34:38 34 minutes, 38 seconds fintech exposure so any on the any strength do we see in the intermediate retail book among the fintex or any other large accounts where are seeing 34:47 34 minutes, 47 seconds some sales or is it uh business as usual? 34:50 34 minutes, 50 seconds Uh I think it's business as usual. We've been prudently calibrated the growth across the sectors. Uh if you look at it 34:58 34 minutes, 58 seconds uh and and we've also been pretty prudent in terms of the volume growth. 35:02 35 minutes, 2 seconds Uh we don't we don't want to unconsciously uh want to ensure we consciously look towards the highquality underlying assets when we finance and 35:10 35 minutes, 10 seconds the lending practices. uh and that's why you know the Q1 growth was or the H1 35:17 35 minutes, 17 seconds growth was largely muted at 15%. uh I think we're seeing a better trend in the underlying books of each originating 35:24 35 minutes, 24 seconds partners as we seeing better quality of book and uh book coming in we happy to support with more liquidity solutions 35:32 35 minutes, 32 seconds and that holds true for placement that's holds true investments that holds true bonds everything else including 35:39 35 minutes, 39 seconds structured finance product yeah sure thank you I think that's it from my side thank you and all the best 35:47 35 minutes, 47 seconds for the future courses yeah thanks Thank you. The next question is from the 35:54 35 minutes, 54 seconds line of Hendra Pradhan from Maximal Capital. Please go ahead. 36:04 36 minutes, 4 seconds Mr. Hendra. Yeah. Hi. Are you able to hear me? Yes sir, we are. 36:11 36 minutes, 11 seconds Yeah. So, uh the first question on the credit cost. Uh so we have uh uh gotten 36:18 36 minutes, 18 seconds at 2.7% for this quarter. Um now a large part of it is also contributed by uh you 36:26 36 minutes, 26 seconds know higher in higher credit cost in intermediate retail which you said is part of a prudent uh framework and the 36:35 36 minutes, 35 seconds other thing is MFI. Uh now given that both these things may not be sustainable 36:42 36 minutes, 42 seconds uh in the next year what kind of credit for guidance uh would you look at at the new book uh in FI27? 36:52 36 minutes, 52 seconds Hey uh like I said if you see uh you know for intermediate retail we created an overlay of proven provisioning we 36:59 36 minutes, 59 seconds spoke about it you've seen the improvement in the consumer from what it was in Q1 to Q Q2 and so is in rural 37:08 37 minutes, 8 seconds like I said that our new book um you know which we are originating and if I look at it over the last 10 months 12 37:16 37 minutes, 16 seconds months book it is performing better than the pre-stress level uh we looking at the bar zero accretion and I spoke about 37:23 37 minutes, 23 seconds it. It is lower than what it used to be uh around uh around January 24 to April 24 which was a good period of the book. 37:32 37 minutes, 32 seconds So we are pretty confident around on it. 37:35 37 minutes, 35 seconds If there is something we we are holding on to you know overall credit cost of range bond between 2.6 to 2.8 and that's 37:44 37 minutes, 44 seconds the number we believe uh is well within there. I know it's a little bit of a conservative piece. I'm also personally 37:52 37 minutes, 52 seconds very confident that we should do better than uh better than these numbers. 37:58 37 minutes, 58 seconds No sir, that is for FI26. But uh you know you mentioned that whatever to pass through will pass through. So that is all right. But given uh you know the 38:07 38 minutes, 7 seconds situation right now what can we assume for next year? 38:12 38 minutes, 12 seconds Oh, I think next year like we said, I think uh we we should see as you build the quality of this book uh you know if 38:19 38 minutes, 19 seconds you're going to end this year at 2.6 to 2.7 the following year our credit cost should be between 2.3 to 2.5% here or 2.6%. It shouldn't be more than that. 38:29 38 minutes, 29 seconds That's where it is. That's the quality of business we speak of. 38:34 38 minutes, 34 seconds We've always said that we'll remain between 2.5 to 2.7. uh I target is to get lower than that but that's the 38:41 38 minutes, 41 seconds that's the number okay and on the fee and other income in the ro tree we see that in this quarter 38:49 38 minutes, 49 seconds this has been subdued at 6%. So um you know maybe because of stronger credit 38:55 38 minutes, 55 seconds filters that we have used uh but you know going forward as things stabilize where do we want this number to be uh 39:04 39 minutes, 4 seconds again you know more from a next year's perspective rather than the remaining remainder of like we said last year this number was 39:11 39 minutes, 11 seconds about 80 90 basis point I think it if you look at on a full year basis we should be close to 80 85 to 90 39:19 39 minutes, 19 seconds basis point and uh as we go forward with the credit demand picking up this number should be upward of 90 to 110 basis 39:26 39 minutes, 26 seconds point on a forwardlooking that's what we working towards so growth in funds uh growth in placement growth in bonds 39:33 39 minutes, 33 seconds platform all of these are strong feine uh and we have all of those capabilities uh last quarter particularly was slow 39:41 39 minutes, 41 seconds also because the credit demand you know uptake only happened around mid of September uh correct till then even the 39:50 39 minutes, 50 seconds even even on the vehicles finance or some of the other pieces we were not seeing as seeing as much of demand as we see the demand picking up uh I'm pretty 39:58 39 minutes, 58 seconds confident uh on an overall basis we should land upward of uh 80 basis point for the full year 40:06 40 minutes, 6 seconds okay and another quarter will happen depending on depending on the environment what you want to do transaction you want to take not take uh 40:15 40 minutes, 15 seconds you know like I said we only represent transaction which pass through our risk filters Yeah. So sometime we let go of stuff which we don't think is right thing to 40:24 40 minutes, 24 seconds take for uh for our investing partners to look at it. 40:31 40 minutes, 31 seconds On the cost of fund we mentioned that you know so we have reduced we have got a 40 basis point reduction in this quarter and we mentioned that this is 40:40 40 minutes, 40 seconds just the 50% uh of the overall decrease that we might have. So uh but this has 40:48 40 minutes, 48 seconds been erratic also like uh quarter before it was 8.7 and then it increased in Q1 by 20 basis point. So are we looking at 40:57 40 minutes, 57 seconds this to settle at around 8% uh given the given where repo and uh things are you want to say? 41:06 41 minutes, 6 seconds Yeah. Yeah sure. So this 8.9% for quarter 1 was the overall uh uh cost for the entire book and this 8.7 that you 41:15 41 minutes, 15 seconds are mentioning is largely the incremental cost. So I think uh you know we should settle in this range of around 8.5 to 8.6% 41:24 41 minutes, 24 seconds uh in the next few quarters. uh uh this is this is what we are giving a guidance but uh but there are there is scope 41:31 41 minutes, 31 seconds there may be a 10 15 basis points lower as well but uh as a guidance we would say that we will stick to around 8.5 41:39 41 minutes, 39 seconds between 8.5 to 8.7% for the year now at you mentioned that uh you know we have received around 50% of the rate 41:46 41 minutes, 46 seconds cuts that have been there in the market so what is the base from which we are comparing this because we are already at 41:53 41 minutes, 53 seconds 8.5 so how much have got and how much further is the scope? 41:58 41 minutes, 58 seconds Sure. So a lot of these banks who would have you know already reduced the MCLR they would have given loans at a much 42:06 42 minutes, 6 seconds higher rate. So even if their MCLR comes down it will not be very significant because if you recall a year back the 42:13 42 minutes, 13 seconds the rates were close to 9th quarter 930 for us. So even if they have to reduce the rates by around 40 basis points, 42:21 42 minutes, 21 seconds this will not be uh this will not reduce my overall cost to below 8.7%. So that is the reason I'm saying we will be in 42:29 42 minutes, 29 seconds the range of around 8.5 to 8.7% uh incremental and uh for the year we should close in the range of around 8.6%. 42:38 42 minutes, 38 seconds Okay. And just final one bookkeeping question now you have been uh taking the insurance on the MFI part. So has that 42:47 42 minutes, 47 seconds also contributed towards increase in the OPEX and how much in absolute number would we have paid in terms of premium? 42:57 42 minutes, 57 seconds We will have to get back on the exact number for that. Uh maybe Chaitan will uh you know circle back to you with that number. 43:05 43 minutes, 5 seconds Thank you and all the best sir. Thank you. Thank you. Thank you. 43:13 43 minutes, 13 seconds Thank you. The next question is from the line of Dal Javi from Crown Capital. Please go ahead. 43:23 43 minutes, 23 seconds Mr. Good evening, sir. Thank you so much for taking my question. Hopefully I'm Yeah. 43:29 43 minutes, 29 seconds Yeah. Hi. Firstly, congratulations on a great set of results, sir. So, so I just wanted to know in terms of guidance that we just gave right now. I don't know if 43:37 43 minutes, 37 seconds I could hear this correctly. You're saying an AUM growth of around 20 22% and ROA of 2%. Right? Is that fair sir? 43:47 43 minutes, 47 seconds No no we said uh the overall growth of 22 to 20 22% 20 to 22% and ROI of 2.8%. 43:56 43 minutes, 56 seconds 2.8%. 43:58 43 minutes, 58 seconds Okay. Okay. Yeah. Yeah. Because I was about to ask that in H1 we've done such good ROA. Yeah. Yeah. Okay. Okay. That that makes a lot of sense. 44:07 44 minutes, 7 seconds Hello. Yeah. Yeah. 44:09 44 minutes, 9 seconds Yeah. Yeah. Saying that uh sequentially we have improved from 2.4 to 2.6% already in Q2 and end of the year we should be uh in around 2.8%. 44:22 44 minutes, 22 seconds Oh. Oh okay. Okay. Okay. That that helps a lot sir. And so I just wanted to go maybe in a more directional for a longer 44:29 44 minutes, 29 seconds term vision like we have the slide where we've shown that we've grown over 30% despite demonetization covid and now mfi 44:37 44 minutes, 37 seconds stress. So just want to know like currently when you're saying our book is performing better than what it was pre-stress. So maybe next 2 years can be 44:46 44 minutes, 46 seconds even more accelerated like 20% is the 20 25% is the guidance but it can be towards the more higher side because I 44:54 44 minutes, 54 seconds think whatever bad in terms of macro environment was supposed to happen has probably happened I don't know if 45:01 45 minutes, 1 second anything worse can hopefully god forbid doesn't happen but is is it a fair assumption now the acceleration phase where you know we can even be h better 45:10 45 minutes, 10 seconds than what we are performing previously hey Thanks uh thanks for uh pretty insightful you picked it up said for 45:18 45 minutes, 18 seconds this year our growth should be between 22 to 22% between 20 to 22% 45:26 45 minutes, 26 seconds on a forward-looking we said a business the given the quality of business we should be growing anywhere between 25 to 45:32 45 minutes, 32 seconds 28% should be a sustainable growth rate on a yearon-year basis you know sometime you have to calibrate depending the risk 45:40 45 minutes, 40 seconds you are seeing uh you know and That's one of the reasons we calibrated our growth. But the core businesses grew like I said our direct lending business 45:49 45 minutes, 49 seconds to MSME to secured MSME to uh the overall MSME as a cohort, consumer as a cohort grew almost 30% plus. So you know 45:58 45 minutes, 58 seconds I think uh overall growth forecast on a forward-looking basis should be 25% to 28%. this year uh given that the H1 and 46:08 46 minutes, 8 seconds Q2 was muted and now we seeing the growth we should land somewhere between 20 to 22%. 46:16 46 minutes, 16 seconds Okay, okay, fair fair enough. Yeah, that's it from my side. Thank you so much. All the best. Thank you. 46:23 46 minutes, 23 seconds Thank you. The next question is from the line of 46:30 46 minutes, 30 seconds Jariala from Dan Capital. Please go ahead. 46:34 46 minutes, 34 seconds Hi, thank you for the opportunity. Uh sir, um our credit cost has improved on the NFIPs uh basically the rural 46:43 46 minutes, 43 seconds business. So uh what are the green fields are we observing there? Uh can you throw some color there? And 46:50 46 minutes, 50 seconds secondly, our provision on stage two has uh sequentially came down. So um what is the reason for that? Uh those two 46:59 46 minutes, 59 seconds questions on my side you want to take it because we spoke about zero accretion. So maybe want to give more granular texture. 47:10 47 minutes, 10 seconds Great. Thanks. Thanks for the for the question. 47:15 47 minutes, 15 seconds Uh as you mentioned the MSME credit cost for Q1 and Q2 both is at 1.8%. Uh and what we are seeing actually is the 47:24 47 minutes, 24 seconds collections improving and the the flows actually have come down a little between uh between Q1 and Q2. the way we look at 47:32 47 minutes, 32 seconds it with improved focus on collections and the flow control. Uh this should improve as far as the MSMIC grade cost 47:40 47 minutes, 40 seconds is concerned on the MFI MFI grade cost MFI grade cost 47:47 47 minutes, 47 seconds MFA grade cost again as while the CGFMU is there but in terms of the current 47:54 47 minutes, 54 seconds grade cost you can see uh Q1 was 7.7 and Q2 is 5.1%. 48:00 48 minutes uh we should expect the trade cost to improve the net equation to par that is 48:07 48 minutes, 7 seconds one on one plus oneplus uh 1 to90 has actually come down quite a bit between uh Q1 and Q2 uh directionally it is 48:15 48 minutes, 15 seconds looking pretty reasonable also the advantage of using our own scorecard which some of the other lenders also now begin to use called new 48:24 48 minutes, 24 seconds score helps us not only to get better approval rate but also to eliminate potentially bad customers and while we 48:32 48 minutes, 32 seconds may use CGFMU scheme but our senses with or without our quality of the book should be significantly better uh using 48:40 48 minutes, 40 seconds our code cards and sir uh what would be the overall credit cost for the rural business for 48:48 48 minutes, 48 seconds this year currently yeah credit will be about 5.1 48:58 48 minutes, 58 seconds currently 5.1 I I'm asking for the year 49:04 49 minutes, 4 seconds Q2 is 5.1 uh and obviously Q1 was at 7.7 which was slightly elevated uh the way we look at it overall for the year 49:12 49 minutes, 12 seconds should be we should be able to maintain under five around goes to five I think if we approve as we go forward 49:19 49 minutes, 19 seconds on a quarteronquarter basis yeah that's where it should be yeah sir and on the PCR on stage two 49:27 49 minutes, 27 seconds yeah on the PC your question. It's a it's a matter of composition of what was there in uh what type of asset is there in the stage two. uh we have seen uh an 49:36 49 minutes, 36 seconds addition uh an addition of one asset uh in uh stage two which required unlike a 49:44 49 minutes, 44 seconds retail uh portfolio where the stage two provision requirements are significantly higher under indu 49:51 49 minutes, 51 seconds under IND when uh when the life of an asset is uh like equal to or less than one year the provision coverage ECL 50:00 50 minutes requirement on a stage two asset is not substantially different uh from stage one asset if the average life of the asset is lower because of which when if 50:09 50 minutes, 9 seconds the if the uh stage two composition is such that the asset which requires lower 50:17 50 minutes, 17 seconds stage two coverage is one that has added to the pool obviously your coverage ratio will look a little lower it's just 50:25 50 minutes, 25 seconds it the models model remain remains intact all the rates remain intact and it's just a composition of stage 50:34 50 minutes, 34 seconds Okay sir, thank you. 50:40 50 minutes, 40 seconds Thank you. The last question comes from the line of Bat Sharma from Three Sigma Asset Managers LLB. Please go ahead. 50:52 50 minutes, 52 seconds Yeah. Hi Ashish uh and team. First and foremost uh congratulations for a good quarter. uh Aish I I'm a retail 51:01 51 minutes, 1 second investor. I want to just understand what is your overall I'll say long-term positioning for Northstar in uh say uh 51:10 51 minutes, 10 seconds uh vision for Northstar in Indian financial ecosystem right where do you see yourself in next four years in terms of uh say being a large NBFC or any 51:19 51 minutes, 19 seconds special segment specific NBFC just wanted to have a overall I'll say vision from you no I think thank you part and good bat 51:28 51 minutes, 28 seconds thank you bat uh I think fair to say the unique strategic posture which northern has is hither to no other company. If 51:36 51 minutes, 36 seconds you take a composition of the capabilities and expert and a domain expertise northern has developed uh 51:44 51 minutes, 44 seconds essentially financing the credit needs of India's underserved household and businesses through a multi- channelannel we run probably the most unique credit 51:53 51 minutes, 53 seconds solution business which is where we can originate large pool of retail loans whether they are housing loans whether they are consumer loans whether they are 52:01 52 minutes, 1 second MSME loans whether they are vehicle finance whether they are agree see whether they are solar uh um across the 52:10 52 minutes, 10 seconds seven sectors way we operate uh we have our proprietary scorecard we've been doing this each of the segment we've 52:18 52 minutes, 18 seconds been doing for more than 10 years so this means we have over 55 million time series of loan performance data of 52:26 52 minutes, 26 seconds individuals unique individuals uh we then build the competence of for last 15 years to take these pools to 52:34 52 minutes, 34 seconds institutional investors. We placed over 1.3 trillion INR of institutional 52:40 52 minutes, 40 seconds credit. We only take those places uh where we have exposure where we track risk to the institutional investors and 52:49 52 minutes, 49 seconds that reflects on the quality when a paper comes from Northern AR and that's a unique capability not a transactional capability but a unique capabilities. 52:59 52 minutes, 59 seconds We've been doing it for 15 years. It's core of the credit solution piece to us. 53:04 53 minutes, 4 seconds We can make that paper available to a retail investors for last three years through our bonds platform. Please do 53:11 53 minutes, 11 seconds look at altify.ai. You can download the app. We've been placing almost $2 billion through our performing credit 53:20 53 minutes, 20 seconds funds where the current outstanding is about $3200 of assets under management. 53:24 53 minutes, 24 seconds But since these are amotizing funds, you originate and you deploy a lot of assets. We've run 12 funds so far. Six 53:32 53 minutes, 32 seconds of them have closed. The funds which have closed have generated gross returns of 14 and a quarter of between 14.25 to 14.5%. 53:42 53 minutes, 42 seconds That's a performing credit returns. 53:44 53 minutes, 44 seconds That's a return more in line with uh we've delivered. We right now have six funds which we are running. We are raising three money for three new funds. 53:54 53 minutes, 54 seconds One is in the space of climate. The second is in space of uh MSME. The third 54:01 54 minutes, 1 second is also in the space of MSME and the fourth will potentially be in the space of women entrepreneurs. 54:09 54 minutes, 9 seconds So we run high impact funds both highquality HNI uh and USNI and 54:15 54 minutes, 15 seconds institutional investors invest in it. So ability to originate, ability to underwrite, ability have a unique 54:22 54 minutes, 22 seconds technology platform which none other has to process so much of data information 60 million uh you know time series of 54:32 54 minutes, 32 seconds loan data coupled with then the placement business then the bonds platform then the performing credit funds and our own balance sheet to 54:40 54 minutes, 40 seconds support and build on top of it risk mitigation and collection team that's created a unique capability unlike like 54:47 54 minutes, 47 seconds any other institution. So that's the one part of it. Using that learning then we said we should also build for last five to six years we built direct to customer 54:56 54 minutes, 56 seconds business which focuses on MSME consumer and rural. So it's a great mix uh and a 55:03 55 minutes, 3 seconds unique capability of a very well diversified retail financial services business with a very strong fee 55:10 55 minutes, 10 seconds franchise. I think uh that gives us uh both the domain expertise consistency of 55:18 55 minutes, 18 seconds performance over last 15 years we've been profitable quarter on quarter year after year so there is lot to speak in 55:25 55 minutes, 25 seconds terms of unique positioning and actually if you look at on my liability profile uh what spoke of cost of funds in 55:33 55 minutes, 33 seconds including the core prof underlying profile of that almost 30% of our borrowing comes from uh multilaterals 55:41 55 minutes, 41 seconds both domestic and overseas. So given the entire unique head space, it positions 55:48 55 minutes, 48 seconds us with the right to win as a diversified retail lender and a unique fee franchise between solutions 55:55 55 minutes, 55 seconds placement and uh uh uh and the fund management business. uh when I look at it forward-looking I think growing at 25 56:04 56 minutes, 4 seconds to 30% it gives us well positioned for us to be a high quality growth growth 56:11 56 minutes, 11 seconds franchise uh getting you know to the late teens roe over the next two to 56:18 56 minutes, 18 seconds three years I think that's where that's what we look at it and the advantage we have is given given the unique nature of a business and so much of credit which 56:27 56 minutes, 27 seconds flows through us uh we we should be we should be performing significantly better. So our sense is from current 56:34 56 minutes, 34 seconds return on assets of 2.7 to 2.8 if we're going to end this year at around that we should get to see a 100 basis point 56:42 56 minutes, 42 seconds improvement over the next four quarters four to six quarters. I think that's that's where I'm looking at it. No Ash 56:49 56 minutes, 49 seconds thanks and uh uh really appreciate uh one last I'll say closing question and comment. uh one is just that uh 56:58 56 minutes, 58 seconds appreciate you giving a guidance of 27 30% growth but uh uh I assume some of 57:05 57 minutes, 5 seconds this would be linked to the growth of the economy also right so are you probably uh somewhere have you 57:13 57 minutes, 13 seconds benchmarked yourself to with regard to the overall GDP growth or or you are probably putting this 30% uh 57:21 57 minutes, 21 seconds no no I not saying 25 to 20 I think we benchmark both The the way to look at it uh on a banking piece is to look at it 57:29 57 minutes, 29 seconds saying if you if the GDP is growing 7 7 and a4% can you grow 3x of that should be doable for the for the GDP to grow at 57:37 57 minutes, 37 seconds 6 or 7%. Okay, that's the one part of it. The second the uh one in the credit solution you have it you have a wide 57:45 57 minutes, 45 seconds sector so you can dial up dial down and you have the full capability between performing credit funds bonds platform 57:52 57 minutes, 52 seconds uh and the balance sheet to support in the in the direct to customer a chosen field is three uh correct one is MSME we 58:00 58 minutes know 50% of India's MSME does not have access to formal credit that's a very large cohort of for for us to grow or 58:09 58 minutes, 9 seconds for all the lenders to grow in that segment. U our entire GDP 62 64% is consumptionled. This means it's a consumption going to continue to happen. 58:20 58 minutes, 20 seconds That means your consumer finance business should continue to grow at 25% plus in rural India about 10% of only 10% have access to formal formal credit. 58:32 58 minutes, 32 seconds 90% still doesn't have that's the power we need to bring into play. So I think we've very consciously chosen three key 58:39 58 minutes, 39 seconds segments where we want to play directly and we have a unique strategic foreure uh with none other uh institution in a 58:47 58 minutes, 47 seconds credit solution business. Uh there are very few player which can take a holistic view of credit solution between 58:54 58 minutes, 54 seconds lending placement funds management bonds and all of that capabilities. I think that gives us a right to win in the areas we chose to play. 59:04 59 minutes, 4 seconds Best wishes to the entire team. 59:06 59 minutes, 6 seconds Thank you very much. Thank you for asking a very insightful question and making me to think. Thank you. 59:15 59 minutes, 15 seconds Thank you. Hey, thank there's no other question. 59:21 59 minutes, 21 seconds Yeah, that was the last question. I now hand the conference over to the management for closing comments. 59:27 59 minutes, 27 seconds Thank you very much. We truly appreciate active participation and insightful questions. uh which makes us think, makes us work harder. We stand committed to building a highquality franchise. 59:38 59 minutes, 38 seconds Thank you all. Have a great weekend and have a great rest of the year. Thank you. Thank you. Thank you. 59:45 59 minutes, 45 seconds Thank you all on behalf of Tam Capital Advisor. That concludes this conference. 59:50 59 minutes, 50 seconds Thank you all for joining us and you may now disconnect your lines.